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Episode: [REPLAY] Crypto for Institutions 1:  Eric Peters – The Macro Case for Bitcoin (Capital Allocators, EP.180)

Author: Ted Seides – Allocator and Asset Management Expert
Duration: 00:56:31

Episode Shownotes

Eric Peters is the founder and CIO One River Asset Management, where he searches for high conviction strategies coming out of his team’s expertise trading and investing in thematic macro, volatility, systematic, and inflation strategies – each as it turns out, turned his focus on study bitcoin and cryptocurrencies. Eric

made news in November when he executed a $600 million purchase of bitcoin, then the largest public transaction to date. He has called bitcoin the most interesting macro trade he’s seen in thirty years in the business, and we kick off this mini series, Crypto for Institutions with his macro case for the digital asset. Our conversation discusses the intrigue of Bitcoin as a form of money, how digital currencies will somewhat ironically increase the power of governments and the likely co-existence of bitcoin with government digital currencies in the future. The then turn to the development of institutional infrastructure for digital assets, Eric’s perspective on bitcoin as an investor and a trader, the reflexive nature of bitcoin supply, and the risks in the asset. Lastly, we discuss the story of Eric’s big trade, the future of bitcoin, and institutional interest in the space. Please enjoy my conversation with Eric Peters in this first of four episodes in the mini-series Crypto for Institutions. Learn More Subscribe: Apple | Spotify | Google Follow Ted on Twitter at @tseides or LinkedIn Subscribe Monthly Mailing List Read the Transcript

Full Transcript

00:00:01 Speaker_02
Capital Allocators is brought to you by TenEast, an investment platform for sophisticated investors to access private markets. 10 East brings benefits of having your own family office without the cost and headaches of doing so.

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It's founded and led by Michael LaFell, former Deputy Executive Managing Member of Davidson Kempner. Michael and his investment team offer members the opportunity to co-invest by offering at their discretion.

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Michael and his team source, diligence, and commit material personal capital to each investment.

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The opportunities shared on the Tennies platform offer exposure to private credit, real estate, niche venture and private equity, and other idiosyncratic investments that typically aren't available through traditional channels.

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Post-investment, the Tennies team conducts ongoing monitoring and reporting, just as you'd expect from an institutional investment organization.

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I've known Michael for about a decade, and after becoming impressed by the quality of 10East offerings, its research process, and high-quality investment team, I became an advisor to the organization and investor in multiple offerings.

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You can learn more and join me as a member at 10East.co. That's the number 10, East, dot, C, O. Capital Allocators is also brought to you by SRS Acquium. Want to make sure your M&A processes aren't stuck in the past?

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00:02:38 Speaker_02
This show is an open exploration of the people and process behind capital allocation. Through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital.

00:02:53 Speaker_02
You can keep up to date by visiting capitalallocatorspodcast.com.

00:03:03 Speaker_02
My guest on today's show is Eric Peters, the founder and chief investment officer of One River Asset Management, where he searches for high conviction strategies coming out of his team's expertise, trading and investing in thematic macro, volatility, systematic and inflation strategies.

00:03:21 Speaker_02
Each, as it turns out, turns his focus on studying Bitcoin and cryptocurrencies. Eric made news in November when he executed a $600 million purchase of Bitcoin, then the largest public transaction to date.

00:03:36 Speaker_02
He has called Bitcoin the most interesting macro trade he's seen in 30 years in the business, and we kick off this mini-series with his macro case for the digital asset.

00:03:48 Speaker_02
Our conversation discusses the intrigue of Bitcoin as a form of money, how digital currencies will somewhat ironically increase the power of governments, and the likely coexistence of Bitcoin with government digital currencies in the future.

00:04:04 Speaker_02
We then turn to the development of institutional infrastructure for digital assets, Eric's perspective on Bitcoin as an investor and as a trader, the reflexive nature of Bitcoin's supply, and the risks in the asset.

00:04:19 Speaker_02
Lastly, we discuss the story of Eric's big trade, the future of Bitcoin, and institutional interest in the space.

00:04:29 Speaker_02
As you'll hear in these conversations, the infrastructure for institutions to participate in the space is firmly established and led by service providers whose names may be new to institutions.

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To learn more, search for ticker B-I-T-W or visit bitwiseinvestments.com. Please enjoy my conversation with Eric Peters in this first of four episodes in the miniseries, Crypto for Institutions. Eric, great to see you. You as well.

00:07:28 Speaker_02
And this is kind of unbelievable that about a year ago you came on the show and it was one of the first virtual ones I did. And now I'm super excited to actually be sitting across a big table from you.

00:07:39 Speaker_01
We've both taken a COVID test. We're all good.

00:07:41 Speaker_02
Yeah. The impetus for this was this paper that you wrote and your relatively new interest in digital assets. And I'd love to just get your perspective on how you started thinking about the case for cryptocurrencies, blockchain investing.

00:07:58 Speaker_01
It's something that I've thought about for a very long time.

00:08:00 Speaker_01
I've been fascinated by Bitcoin in particular, less so the extended ecosystem, just it's mainly because I've just been interested in money, not money for the sake of money, but just the study of money and interest rates and fiat currency.

00:08:13 Speaker_01
And I've spent my whole career on it, right? So something new comes along and you're naturally going to be pretty intrigued by it. There've been other, I think, attempts at digital money, but Bitcoin was the first thing that seemed like

00:08:27 Speaker_01
It was very real. And initially, look, I thought it was so real and it was so important that it would never be allowed to survive.

00:08:35 Speaker_01
And the reason that it wouldn't be allowed to survive, in my mind, was regulatory, was governments would look at it and just say, well, you know what? Seniorage is a great power. Why would we ever give that up? There's no reason to give it up.

00:08:47 Speaker_01
And governments, generally speaking, are mass power. They don't shed themselves of different powers. So I thought that it was initially something that governments would watch carefully.

00:08:57 Speaker_01
They would determine which thing in the private sector ultimately proved to be most robust. And then they would effectively take it over and kill the private market for it, and then just turn that into their form of money.

00:09:09 Speaker_01
But over the last few years, my thinking on that has changed. And that's when it became much more interesting from an actual investment perspective.

00:09:16 Speaker_02
So when you circle back a couple of years before you were looking at it from an investment perspective, What was it about Bitcoin that felt real to you as it relates to this concept of money?

00:09:28 Speaker_01
It was very clearly a robust system in the sense that it was decentralized and it worked. And when I say it worked, it's interesting. A lot of people will look at the volatility that Bitcoin has had over its life.

00:09:41 Speaker_01
And to date, it's had six discrete boom-bust cycles. And they would say that's a weakness. And I would just point out that I think that that's an enormous sign of strength, actually.

00:09:52 Speaker_01
Weakness is Pets.com, you know, the sock puppet stock that went to the moon and then collapsed and then basically flatlines at zero, right?

00:10:00 Speaker_01
To have something accelerate the way Bitcoin has over its life and then have deep corrections and then stabilize and then make new highs, that's something that's very interesting, right? And so the more people

00:10:13 Speaker_01
who I got to know who had either become invested or become just passionate about it, the more intrigued I became. And so then you do the, like, I always do thought experiments with things. So I'll look at, say, something like, I don't know, oil.

00:10:29 Speaker_01
And you say, are we really going to all be using fossil fuel in 100 years? The answer is kind of pretty clearly not. And then you kind of start winding back. And then it forces you to kind of think about, well, how quickly will transitions happen?

00:10:40 Speaker_01
It's the same thing for money. In 100 years, are we really going to be using paper dollars and copper pennies and things like that? It's like, obviously not, right? So then you start winding it back. And you go, OK, well, how quickly will that transition

00:10:52 Speaker_01
take and what will look like. And one of the interesting things that I concluded when I thought through things that way is that money will become digital. precisely because it gives governments more power. And we can talk about that in a minute.

00:11:08 Speaker_01
But so then the question is, well, can Bitcoin or digital assets, will they be allowed to exist next to digital fiat? That was the important transition for me to start recognizing that the answer to that is yes.

00:11:20 Speaker_02
So let's start with that concept of government power and digital currency. Play that out for me.

00:11:26 Speaker_01
I think we're observing now what the government is doing with the dollar and the swift payment system. The US has had enormous power because the world uses dollars and uses that payment system.

00:11:39 Speaker_01
And for all the talk about things like Bitcoin being used for dodgy purposes, the reality is cash dollars or euros or any currency. Once they're printed and they're distributed, they're very difficult to track. That's reality.

00:11:56 Speaker_01
Every transaction that's ever happened in Bitcoin's history is available. It's in the public ledger. You can see every single transaction that's ever happened and will ever happen. So why would governments want digital currency?

00:12:06 Speaker_01
Well, I think that they'd want digital currency because If you can force everyone, and by the way, I'm not trying to present governments as being just universally evil and bad. It's just, I think governments act a certain way, right?

00:12:20 Speaker_01
If you're the government and you want to stop money laundering, it's a public good to stop money laundering. It's a public good to stop terrorist financing. It's a public good to stop criminals moving money around for all sorts of reasons.

00:12:30 Speaker_01
So if you really want to control those things, then force everyone into a digital system where every single transaction will be tracked in perpetuity, and then force everyone to have a wallet or a bank account that is registered. And then guess what?

00:12:47 Speaker_01
Once you've moved people off paper money, there's no place to hide. And so that's how the government acquires power through that, because once they do that, well, Think of all the things that you can do with that, right?

00:12:57 Speaker_01
One of the things you can do is you can stop money laundering and stop dodging movements. You can confiscate people's money. You can tax people. You can impose negative interest rates on some group of corporations or people.

00:13:11 Speaker_01
You can give other people subsidies. I mean, the government has enormous power once it associates a person and a corporation with a wallet and then can track every transaction.

00:13:21 Speaker_02
So that presumes to some extent that the government controls that ecosystem when the whole ethos of Bitcoin is a decentralized system.

00:13:29 Speaker_02
So come back to that notion that you came to the conclusion that Bitcoin can and will exist alongside of whatever governments choose to do digitally.

00:13:38 Speaker_01
That's one of those fun questions to think through and also something that as I've become more active in the space, I've come to see as being one of the reflexive elements in Bitcoin.

00:13:47 Speaker_01
So there are a number of reflexive elements in this asset class that I think are really unique. This is one of them.

00:13:53 Speaker_01
So initially, I think it is pretty much unambiguously true that most people who are attracted to this tended to, let's just use Bitcoin, because by the way, a lot of what we talk about, we'll talk about Bitcoin can be extended to other assets.

00:14:06 Speaker_01
But let's say in the case of Bitcoin,

00:14:09 Speaker_01
Initially, I think that most of the people who were attracted to it were attracted for a whole host of reasons, many of which included libertarian type reasons, where it's like, OK, well, this is an anonymous form of value transfer, new world form of money, governments can't touch it, et cetera.

00:14:26 Speaker_01
That attracted a certain type of person. And a part of my brain is that kind of person, by the way. Some of those people acquired very large positions. Some just kind of traded around.

00:14:35 Speaker_01
But as this asset class has matured, and by the way, it's just beginning the process of institutionalization. So there's been a lot of maturation that's happened to get up to this point. But through that process, what's happened is

00:14:49 Speaker_01
It was, in some sense, so unreliable and so threatening to governments in its then existing form that as more people entered it, they recognized there were needs for certain types of infrastructure.

00:15:03 Speaker_01
And as they started building those businesses, they realized that it takes a lot of money to build this business. As you build a business, it requires a lot of money.

00:15:10 Speaker_01
to build, you start thinking about, well, I need to make sure there's a valuable business. I mean, you make sure there's a return on this capital.

00:15:17 Speaker_01
And what you eventually get to is you get to an industry which starts building out the major structural pillars that turn it into a real Industry a real asset class and each one of those requires huge investment.

00:15:30 Speaker_01
And so the people who are doing it recognize that in order for their investments to pay off they actually Ultimately need the industry become institutionalized which mean you need to draw that institutional capital in you need to get the regulators to sign off on what you're doing and if so if you're not the kind of person who can do that you've kind of been left behind in this industry if you are the kind of person to do that and

00:15:51 Speaker_01
You're the type of person that builds Coinbase, which is as an example, which is most recently found that the values I've seen in the private markets are $70 billion, right?

00:15:58 Speaker_01
So now if you're someone who's built a company like that, you don't want the dodgy characters in it. So as this market has matured, What's happened is the bad money has gotten pushed to the side. It's been ostracized, the bad actors, the bad players.

00:16:16 Speaker_01
And the regulators have had to take it more seriously. And they have started to get more comfortable with where it goes. And so a number of years ago, the regulators could have destroyed Bitcoin. They can no longer destroy it.

00:16:28 Speaker_01
They could do various things, but can't destroy it.

00:16:30 Speaker_02
Really people started paying attention to 2017 when Bitcoin price ran up and then later collapsed. What are those key building blocks that have come into place over those last three or four years?

00:16:41 Speaker_01
So big one is custody, institutional custody, and you still see the headlines. I don't know what it was headlined a month or so ago about some poor guy who lost his password for his computer and you know, it's $20 billion or 20 million or whatever.

00:16:57 Speaker_01
It doesn't matter. They make for great headlines, great stories, but. You go back to 2016, 2017, you really didn't have great custodial solutions. And so it was rather nerve wracking.

00:17:08 Speaker_01
And so if you're an institution and there are bad headlines about, I don't know, drug deals being used or arms dealers, we know what all the early adopter bad headlines look like, right? But you needed to have things like custody.

00:17:22 Speaker_01
You need to have good places to trade these coins You need to have some regulation come in and kind of start getting a sense for how regulators gonna treat this you needed to have things like PayPal, you know their deal to basically to create a retail on-ramp into these assets that integrates it with the existing payment systems and and then you need firms to kind of create a

00:17:45 Speaker_01
the on-ramps for institutions because like for instance we speak with institutions all the time and by and large some have very small investments in the space either through a venture deal that they did or maybe with there was someone at the investment team that had great foresight and said listen we should start learning about this to make a very small allocation.

00:18:03 Speaker_01
Those things have happened, not at scale. By and large, most institutions have not gotten comfortable with the players in this space.

00:18:11 Speaker_01
Institutions need someone to be able to feel like they can get access to the asset class without taking all of the operational fiduciary risks that they felt exposed to.

00:18:21 Speaker_01
But these are all issues that have started really being solved post-2017, and they're being solved at an increasingly fast pace right now.

00:18:28 Speaker_02
So if we take for granted the operational infrastructure component of it for an institution, how do you start thinking about value? We know this isn't a cash flowing asset, or how you think about Bitcoin in particular in the context of a portfolio?

00:18:47 Speaker_01
So I partition my brain as part investor and part trader. Sometimes that can confuse even me. In some ways, you're thinking about different time frames and different drivers.

00:19:01 Speaker_01
One of the things really unique about this asset class and this opportunity is that what I see as a trader and what I see as an investor are completely aligned and highly convex. The easy answer is to just throw a number out there.

00:19:13 Speaker_01
We can talk about numbers, but I won't throw one out there initially. I'll just tell you how those different parts of my brain think about it. So

00:19:20 Speaker_01
When I think about it as a trader, when we decided to get into this marketplace and made, at the time, which was the biggest institutional asset allocation in the space, we wanted to figure out what were the best sources of liquidity to quietly get the exposure, anonymously get the exposure, and get it on quickly before anyone figured out what we were doing and ran the price up on us.

00:19:43 Speaker_01
And so this goes back to early November with Bitcoin around $15,000. We called all of our counterparties which shall remain nameless One of them we asked to get a line to trade futures.

00:19:55 Speaker_01
So now let's imagine that we need 10,000 I'm just gonna make up the numbers we need to be able to trade 10,000 contracts and We need to get our papers and we want to do it quickly and get this on before news leaks out So let's figure out can we get all the paperwork done in the next few days?

00:20:12 Speaker_01
And can we get the position on really quickly and we basically learned that it would probably take, I don't know, four to six to eight weeks to be on boarded with this, and that we could probably trade 10 contracts, OK? We need to trade 10,000.

00:20:25 Speaker_01
So if we wanted to do anything in S&P futures or Treasury futures or anything else, the competition for our business is extremely high. So as a trader, what does that tell me?

00:20:35 Speaker_01
It tells me that the biggest institutions in this space do not yet have high appetite to be transacting and helping their largest clients transact and get size on in this space for whatever reason.

00:20:46 Speaker_01
So I would tell you that the trader's mind, the day that I have the biggest banks calling saying, we want to give you 10,000 lines and 100,000 lines or whatever it is to get your business and we'll get it done right away.

00:20:59 Speaker_01
That's one of a whole bunch of different trail markers that I would have to be like, OK, we're now at a different place, right? So what does that tell me? It tells me that the on-ramps have been built. They're being utilized. They're being leveraged.

00:21:13 Speaker_01
And so the world is operational. So forget about the price. I will tell you that given the institutional interest that you read about every day and that we see as a firm,

00:21:24 Speaker_01
until those on-ramps are built, and until I'm getting those calls from the biggest brokers and investment banks, then there's that. Of course, there's downside. There's always downside in any market.

00:21:35 Speaker_01
But I don't think there's much sustainable downside until we at least get to that point. So forget about what that price is. Because that price, by the way, I said that when we were at $15,000. We're now today, I think we hit $50,000 today.

00:21:47 Speaker_01
But that would be equally true at 100 or 150,000 it's just the price would be higher but that feature that I just described of market function Would not have changed yet. It takes time.

00:21:59 Speaker_01
Okay, so that's the trader in me the investor in me is Look, this is the future of money if it's allowed to survive and Coexist with digital fiat, which I strongly believe it will be then we're at the outset of

00:22:17 Speaker_01
a decade or hundred year journey in terms of what this asset class will become and new money will become. And is it likely that before any of these on ramps are built and investors are fully allocated, is it

00:22:34 Speaker_01
Is it reasonable to think that from an investment perspective that you've already discounted the price of, of all of that innovation that's going to come on top of this platform already?

00:22:45 Speaker_01
And I think the answer, I mean, to me, the answer is unambiguously no. So I haven't given you a number. I mean, we can talk about numbers, but the numbers are much, much higher. And the thing is, there's no negative carry.

00:22:56 Speaker_01
You're not, you know, so if you size it right for institutions, it's inevitably going to be very modest and that's fine.

00:23:03 Speaker_02
So you mentioned earlier the importance of reflexivity in this asset. And anytime we talk about money, you end up talking about faith in whatever that money is. How has reflexivity played out over the last couple of years?

00:23:20 Speaker_01
Well, one of the ways is good money chases bad money out. That's really important. And as that happens, this is one of the great ironies. I call them inversions in this space. I believe that the price will become less volatile the higher it goes.

00:23:38 Speaker_01
And so that's kind of interesting, right? Because you look at something that it's difficult to wrap your head around the value of something because it's... It has no intrinsic value. It's like the purest play on faith that you have.

00:23:53 Speaker_01
Now, by the way, you could say the same thing about gold. It's just we have so many thousands of years where, for whatever reason, we've looked at gold as having intrinsic value.

00:24:04 Speaker_01
and convinced ourselves of various things about it, that we think that it's real and you can touch it. It has substance. This doesn't even have substance. This is just stripped out all.

00:24:12 Speaker_01
It's like stripped out all the noise and said, OK, let's call money what it really is. It is faith, OK? Dollar bills you can hold as well, and you feel like there's substance to them. But it's silly.

00:24:21 Speaker_01
I mean, the Fed can create infinite amount of money electronically in the banking system, just the same way that you could

00:24:28 Speaker_01
Theoretically create infinite amounts of digital assets the thing about bitcoins it forces you to look at something that just says look They're only gonna be 21 million ever.

00:24:37 Speaker_01
Okay, and we could argue around will that code ever break or something happen, but the Highest probabilities there only ever be 21 million. And so you look at that and you go. Okay. Well it has no intrinsic value

00:24:50 Speaker_01
So what should its value be if we want to assign this common faith as a store of value globally? And this is one of the super interesting things.

00:24:59 Speaker_01
I think it's probably, it might be the most important thing about Bitcoin in particular, is that because it has no intrinsic value, but it's a finite supply, its value could be anything.

00:25:15 Speaker_01
That's been a really important thing for me to wrap my head around. And I think it's maybe the least understood. And maybe it's one of these things that I've just taken too many long walks to think about this.

00:25:24 Speaker_01
But the reality is, Ted, everything that you and I have ever traded in our lives, every single thing, has a supply reaction to higher price or lower price, for that matter. It just does.

00:25:36 Speaker_01
There's a supply response in every single thing we've ever traded and things that we don't really feel like we're trading, like our housing has that supply. The price of water has that supply.

00:25:46 Speaker_01
The price of condos in New York, the price of gold, the price of oil, the equities. You and I were just talking about SPACs. The market's finding a way to create more supply, right? So everything we've ever traded has a supply response.

00:25:58 Speaker_01
If the price of Bitcoin goes up 3x like it just did, or 30x, there literally won't be more that's mined. People will compete more aggressively to mine it, but it won't increase the pace of that supply. Same thing if it goes down, by the way.

00:26:15 Speaker_01
And so the reflexivity in that just means that there's this new dynamic that people can't wrap their heads around.

00:26:22 Speaker_01
which leads to a situation where if prices do start going up, the only way you can create more supply is to push the price sufficiently high that these people who have held through perhaps six boom-bust cycles that have been utterly gut-wrenching and most human beings couldn't possibly hold on to through that, who have thought this is going to go up a long way, you have to actually move the price far enough for these people to go,

00:26:50 Speaker_01
Yeah, you know what? You got me. At $50,000, I'm going to let a bunch go, OK? And so there's reflexivity in that, because the higher the price goes, the more money you suck in. The more money you suck in, the more institutionalized it gets.

00:27:04 Speaker_01
The more institutionalized it starts becoming, the more the regulators have to focus on it. The more the regulators focus on it at higher prices, hopefully, the more sensible the regulation becomes, which invites more money in.

00:27:16 Speaker_01
And then you have this reluctant kind of supply response as prices go higher.

00:27:21 Speaker_02
Where along the path did you decide it was sort of time for you to start buying?

00:27:27 Speaker_01
Our clients are, broadly speaking, they think a lot about how to build robust portfolios to all kinds of market environments, you know, big market ups, big market downs.

00:27:38 Speaker_01
We've expressed views that it's highly likely that the late stage of this long economic and market and debt cycle will lead to a large monetary debasement. Essentially,

00:27:50 Speaker_01
Which, by the way, if you're a market historian, that's kind of obvious that that happens. The question is, when does it happen really? And so I think this latest, you know, the pandemic and the policy response coming out of the pandemic,

00:28:06 Speaker_01
seems very clearly to us to mark the beginning of that cycle. That's incredibly important for every investment strategy out there and every portfolio out there. But one of the things that's extremely difficult is

00:28:21 Speaker_01
If you have the Fed and the Treasury, in many respects, co-joined, and the Treasury is issuing a lot of debt, and the Fed is creating money to buy that debt, and then it's being spent and kind of pumped into the economy, and the Fed is actively trying to keep interest rates low so that the real interest rate is deeply negative, then you kind of know your bond portfolio, you're guaranteed to lose money.

00:28:41 Speaker_01
You're either going to lose money slowly by owning it in the front end and just having your real interest rate work negatively, or you might lose money fast in the long end, where the bond market really tanks and you get destroyed.

00:28:53 Speaker_01
So our clients have been really focused on that. And by November, it seemed that we had the right time. And some of our clients were really interested in actually making that kind of allocation. We'd just gotten through the election.

00:29:06 Speaker_01
And I think as you saw these assets increase in value from the March lows, it became clear that policy was just going to continue to move toward this

00:29:17 Speaker_01
Highly accommodative phase and so these assets what looked really interesting in that macro quadrant Where you think about what policy is really doing these assets are just uniquely positioned to do well, by the way Gold should do well as well except these are just this really Interesting highly convex version of gold that's I think just deeply discounted So that's what got us in and thankfully we were able to and we did

00:29:42 Speaker_02
Have your clients thought about the use of Bitcoin, maybe other cryptocurrencies in the context of their portfolios?

00:29:50 Speaker_01
You speak with all the same people. I think one of the major struggles that guys are contending with is, OK, let's say everyone in the world has a 60-40 portfolio that they dress up in one way or another.

00:30:02 Speaker_01
Maybe they leverage it, and it's some form of risk parity. Maybe they amplify it with private equity, whatever. But it's a 60-40 portfolio in one way or another. The problem is the 40 just doesn't work anymore, right?

00:30:14 Speaker_01
And the reason that you love the 40 for the last few decades, our entire trading career, you're in mine, has been that interest rates have been declining. And they finally got to a point where they just really couldn't decline meaningfully.

00:30:26 Speaker_01
So investors are looking at their portfolios. And by the way, this is, I think, a slow and painful realization, because it lacks great answers or great solutions. But they're slowly realizing, it's like, OK, so I own a lot of equities.

00:30:40 Speaker_01
I need to make 7%-ish. And maybe it's 6%, or maybe it's 8%, or whatever. But it's in that zone. Equities are really expensive. My 10-year bond yields 80 base points. The math just does not work.

00:30:54 Speaker_01
So they're looking at that and they're going, okay, so how do I think about a more robust portfolio? And some of them are thinking about the risk to monetary debasement and inflation. And that's very scary risk, right?

00:31:04 Speaker_01
Because then your bonds turn into losers. And if you look, you can try to convince yourself that equities are going to do OK in a mild inflation.

00:31:12 Speaker_01
But if inflation is even a little bit more than you'd hope, as a fiduciary, you can't help but look at the 1970s and go, that could happen too, right? So your equities might lose money and your bonds lose money.

00:31:23 Speaker_01
Some of our clients think deeply about gold, and some have allocations to gold. The ones who are thinking about digital assets are thinking about it in kind of that debasement hedge. part of their portfolio.

00:31:38 Speaker_01
And it's really attractive because it is highly convex. So you could have a relatively small allocation, and it could go up 10x, or it could go up more than 10x.

00:31:47 Speaker_01
And so at a 2% allocation, by the way, that saves you from a lot of portfolio pain elsewhere in that kind of environment. So I think that's another thing about it.

00:31:56 Speaker_01
The last thing I'd say on that is they're also looking at this differently from gold in that you kind of have this call option on technology when you buy these assets that you don't have in gold.

00:32:07 Speaker_01
Like gold will be the same in 2000 years as it was 2000 years ago, but these assets are going to be different and improved in a year and 10 years and 100 years. So you have that, you have the exposure to that.

00:32:21 Speaker_02
How do you think about the historical analog of Japan in their zero interest rate environment for whatever it is now, 20 years, where it seems like they've continued to do just fine?

00:32:34 Speaker_01
I'd say that's something really important to get right. Anyone in your seat or mine has thought about that probably their whole career. Let's look at a couple differences, okay?

00:32:46 Speaker_01
So Japan, while it has a big economy in the world, it's a very small nation and it's aged very rapidly. US isn't. Japan is a very homogeneous society. US is kind of tearing itself apart right now.

00:33:01 Speaker_01
There are a whole host of differences that we could also go through. You know, Japan is sitting right off the coast of China and China had a big boom.

00:33:08 Speaker_01
And so Japan was kind of able to spend a couple decades just churning away really, and dealing with its aging demographics and some of its internal issues, but had this big customer right off its coast that it was supplying machines to as they industrialized and things like that.

00:33:25 Speaker_01
So Japan kind of had it easy because they were the first to go through this. The world pretty clearly doesn't have it so easy anymore, and the US definitely doesn't.

00:33:33 Speaker_01
So when you look at the US and you look at the massive deficit that we ran last year, this year's deficit is going to be 15% to 20% with an economy that's actually bouncing back to life.

00:33:46 Speaker_01
I think it's pretty clear that the whole world got to this place where Japan had gotten to, which was very low rates, in some cases negative like Europe. Monetary policy really wasn't lifting the economy anymore. Nothing was working.

00:34:01 Speaker_01
And every central banker in the world was pounding on the table for the last two years and saying, we have to borrow a lot of money. Fiscal policy needs to be involved, or monetary policy won't work. And it's barely working anymore.

00:34:12 Speaker_01
They didn't want to say it doesn't work anymore, because then the markets would have freaked out. But they said, we need your help. And so now you have this global catalyst, which was COVID.

00:34:22 Speaker_01
And you've broken through this mental barrier that we, over the course of our career, there's been this economic orthodoxy that said you have to have an independent central bank, or all hell will break loose. Well, guess what? We no longer really have.

00:34:35 Speaker_01
independent central banks. They're working together with treasury and politicians are looking at that as a solution right now, and inflation hasn't taken off.

00:34:42 Speaker_01
So I think that we're just in a different mental framework at this point from a policy perspective, and that makes all the difference. It really does.

00:34:51 Speaker_02
Let's talk a bit about what could go wrong from here. You highlighted some of the risks in the earlier years of Bitcoin with the infrastructure in place. How about going forward?

00:35:02 Speaker_01
There definitely are risks like there are in anything. And I think when you consider the investment proposition in anything you do, there obviously are going to be risks.

00:35:13 Speaker_01
And you have to, I think, you have to try to understand what they really are, and then ask yourself, are they well-reflected in today's price? And so let's go through the risks. I'd say that one of the big obvious risks is the regulatory risk.

00:35:31 Speaker_01
And those risks differ around the world, by the way, because theoretically, the US could outlaw the holding of Bitcoin. And that would, by the way, they could not make Bitcoin illegal. It's this decentralized network that exists globally.

00:35:46 Speaker_01
You'd have to have every country in the world deem it to be illegal with harsh consequences. And it probably still wouldn't go away. The price would be a lot lower. So let's just talk from a US perspective. It's possible that the US regulators

00:35:58 Speaker_01
or this government or future government could come in and say, it's illegal to hold it. Just like at a point in history, they said it's illegal to hold gold. that would knock the price down a long way.

00:36:08 Speaker_01
And then I think what would likely happen is that that decision would harm the US interest to such a degree that that policy would be reversed, just like it was in gold eventually. But that's a risk. So that could happen.

00:36:21 Speaker_01
I think I've gotten much more comfortable with it as I've gotten to understand the regulatory environment and have interacted with them. I think that

00:36:31 Speaker_01
What people misunderstand is the intent of regulars is to create a sound foundation for digital assets upon which American entrepreneurs and financial institutions can innovate and can build.

00:36:46 Speaker_01
And financial services are a super important part of the US economy, and so if you were to allow the foundation to be filled with cracks and cracks are just bad actors, you know, illicit activity.

00:37:00 Speaker_01
If you allow that to happen, you undermine the potential value of everything that you can build on that foundation.

00:37:06 Speaker_01
Whereas if you come up with sensible regulation, which doesn't mean everyone's going to love it, and that's the thing in this industry, a regulator will come out and say something, and most people in the digital asset community will react very negatively.

00:37:17 Speaker_01
But really, it's just that's a normal push and pull between private and public sector, right? But at any rate, I'm comfortable that they will not do that, but that's a risk.

00:37:25 Speaker_01
Another risk is that there's some kind of flaw in the code or major attack of some sort that takes the whole thing down.

00:37:34 Speaker_01
This piece of software, this protocol, has got to have withstood more attacks than probably anything in the history of mankind by super smart people. And there are also very smart people who are constantly working to fortify it.

00:37:50 Speaker_01
It's almost like a living technology system. not viruses, but it's fending off attack. And so that's one of the other reflexive features is the more money, the more valuable this becomes, you could say, the more it becomes a target.

00:38:03 Speaker_01
I mean, it's almost a trillion dollars, a big enough target, right? The more value that people have in this, the more incentive there are for the people who hold their assets to make sure that it's as strong and robust as possible.

00:38:15 Speaker_01
I think that there are some risks there, but the system is incredibly anti-fragile and so would bounce back from some type of attack that was moderately successful. There are ways that this can bounce back from some type of awful attack.

00:38:30 Speaker_01
And then I'd say, The other risks are more around the custody of these assets, things being stolen. Because at the end of the day, they're bear securities, right? They're bear securities, by the way, that can be tracked everywhere.

00:38:40 Speaker_01
So even if someone steals something, a huge theft, you can see where that money goes. You can see what wallets it travels to. And the FBI and law enforcement and SEC, everyone's going to be all over that. But if there were a large theft,

00:38:53 Speaker_01
of some sort, then I think institutional investors could say, you know what, I'm not going to touch it for three years. And the price would go down.

00:38:59 Speaker_01
And so incidentally, that's one of the risks that we seek to mitigate with our fund structure to kind of insulate our clients from that.

00:39:06 Speaker_01
Because to the extent that we can educate clients about why these risks are overpriced in the market, and we can also help mitigate these risks, I think as a fiduciary, we're doing the right thing. Because I think the market is

00:39:21 Speaker_01
overpricing all these risks, and that's why the price is low relative to where it will be.

00:39:27 Speaker_02
So I know in November, there was a story that hit the news about the big trade that you did and the work you're doing with Brevin Howard. I would love to hear the story of the trade.

00:39:38 Speaker_02
So walk me through the trade, what it was like being in those markets, what you saw and learned.

00:39:44 Speaker_01
Sure. It's fun to tell trading stories, I guess. And this is definitely the most fun trading story that I have because It was incredibly important that this be super secret just because you're dealing with an illiquid market.

00:39:58 Speaker_01
So I knew that we had to be super secretive. And so pretty much I only knew how much we were going to buy in terms of anything external. And we worked with the Coinbase team.

00:40:09 Speaker_01
We selected them, having done due diligence across the whole industry, everyone in the field. we felt most comfortable with them as an initial partner for us. And we've, we since are diversifying our holdings elsewhere, which was always the plan.

00:40:21 Speaker_01
And there are other great firms. It's just, if we were to do the one significant transaction and do it with a team that I had high conviction would, would have great discretion.

00:40:32 Speaker_01
It was with that team and with that solution where they have an agency desk, meaning I was able to interact with their institutional trading desk. They don't have a proprietary trading desk.

00:40:41 Speaker_01
They don't take principal risk, which just meant I knew that unless someone there leaked information, and I only dribbled information to them, so they never even knew exactly what we were doing and it's full size.

00:40:51 Speaker_01
But unless someone leaked information about what we're doing, there was no one over there to try to front run our orders, which is always the terrifying thing when you're trying to do a big transaction.

00:41:00 Speaker_01
And incredibly, to their great credit, they put a very tight team together. We had a code name for the project. And I spoke with Brett Tejpal, who runs their institutional sales. And he's fantastic. We've done business in the past.

00:41:11 Speaker_01
So I knew him professionally, and he's just outstanding. So he kind of delivered the firm to OneRiver. We had this very tight group of people, and I spent five days working with their institutional trading desk.

00:41:22 Speaker_01
And so what you discover with this asset class is They're pockets of liquidity, they're pockets of illiquidity. It's 24-7, 365. So I spent five days working with these guys and we tried all different types of things.

00:41:35 Speaker_01
So there are all these great algorithms that are available through their Tagomi system. And so I use those, but I also kind of brought in I don't want to say old school 90s FX trading, but kind of really.

00:41:49 Speaker_01
So it's like what you discover is if the market goes up to certain levels, there's so many algorithms in these markets. The market hits a certain round number, let's say 15,100, for instance.

00:42:00 Speaker_01
And if it starts backing off, there are all these algorithms that come in and just drill the price down. And so we'd observe that, and we'd let things like that happen. Or one of the things that was kind of fun is

00:42:11 Speaker_01
as I was speaking with the team there, I was like, well, why don't we put some really big chunky bids in on the market? Like, well, you can't do that. I was like, well, why can't you do that?

00:42:17 Speaker_01
Well, if you do that, then it'll be all over Twitter in two seconds. It's like, well, why is that bad? It's like, well, that's bad because then people will raise the market up. But our view is that the price was pretty high at that point.

00:42:28 Speaker_01
And what we were trying to do is get the position on when everyone was worried that the contested election was going to tank stocks and bring Bitcoin down with it. And so what I really wanted to do is get some big

00:42:39 Speaker_01
holders to think that someone stupid was in the market putting big orders in and make it look like we were really dumb money and then drill it through. Because oftentimes people do that, right?

00:42:49 Speaker_01
They'll drill it through those big orders, hoping that they hit stops below. And then we would let those stops get hit below that weren't our stops. And then we put even bigger orders down to try to scoop up all the stop loss selling.

00:43:00 Speaker_01
So there are all kinds of games that we play, which is fascinating to see. It was really helpful to understand the liquidity of these markets. But Yeah, it took five days and by the way, we barely moved the price.

00:43:10 Speaker_02
And so what was the total size of that purchase?

00:43:13 Speaker_01
We bought, I think this is all public information, but we bought over $600 million of digital assets.

00:43:19 Speaker_02
It sounds like when you talk about buying Bitcoin and having to be sensitive to Twitter, it's hard not to raise the alarm bells of what's happened with all the crowdsourcing convexity of these assets, Robinhood and whatnot.

00:43:34 Speaker_02
How have you thought about what that means for cryptocurrencies?

00:43:39 Speaker_01
It's a good question. I would say that there's a near term and a long term answer for that. The near term answer is that it's just a feature of the market. And there are a lot of people saying all kinds of things in the marketplace.

00:43:52 Speaker_01
We've chosen to be very selective. This is the fourth formal thing that we've done in this interview with our activity in the space. by design, because we're kind of treading very cautiously into what to say and when to say and how to say it.

00:44:09 Speaker_01
And it's been interesting because I think we're viewed as having important insights into what institutions are doing.

00:44:14 Speaker_01
So each time, well, the first three times, you know, that we've said anything, Bitcoin has moved by 15 to 25% within a couple of days, which is kind of wild. But I think that that's

00:44:25 Speaker_01
If I were to think about what's really moving the market and I look at the various things that have happened, obviously Elon's announcement was really important.

00:44:33 Speaker_01
I think those times that we've had something to say, not because it's one river, but because it reflects what we've done, the first large institutional transaction I think are seen as being knowledgeable in that space, those have had real impact.

00:44:46 Speaker_01
So my view is don't say a whole lot. I think a lot of the Twitter stuff that people say so many things that it's part of the landscape, but does it really mean anything? I think Elon's thing was important.

00:44:57 Speaker_01
I think Michael Saylor, some of the things that he said have been important and he's bought a lot, right? So those are all important things.

00:45:05 Speaker_01
I think longer term to me is more interesting because everything I just described is kind of market noise, whether markets moved because Elon did something or someone else had something.

00:45:15 Speaker_01
Maybe they move faster than they would have moved, but it's not like that's sustainably moving markets and keeping them in a place. Markets move because there's some underlying factor that's being priced in.

00:45:25 Speaker_01
And I think that underlying factor is the realization that this is part of the future and they're just wildly underpriced for that. And so that's why we're seeing kind of a repricing move.

00:45:35 Speaker_01
But I think for the longer term, one of the things that could surprise everyone is what a world looks like when you have billions of people who can move money on their phone and are susceptible to information, are susceptible to misinformation,

00:45:56 Speaker_01
You know, I think if you asked Mubarak whether he was surprised that there were flash protests and riots and that some of these new forms of social media combined with cell phones could ultimately topple his regime, I think he would have said that was impossible, right?

00:46:13 Speaker_01
Which is probably why it happened. So I don't know what's impossible and what is possible. If you think about where the world will be in, let's say 10 years, in 10 years,

00:46:24 Speaker_01
I have a high degree of confidence that almost everyone on the planet will have a digital wallet on their phone. And they'll view it as being as secure as Citibank or anything.

00:46:35 Speaker_01
And they'll be able to move money between currencies, both government fiat currencies globally, they can already do that, or in cryptocurrencies.

00:46:44 Speaker_01
But at that point, the little like the Twitter chatter, I don't think that will matter, because I don't think that stuff ever matters. But in big events, maybe it does matter.

00:46:52 Speaker_01
Maybe there's a run on a currency in Japan, or, you know, I don't know what happens. But I think it's interesting. Things will be able to happen in a decade that today is impossible for them to happen.

00:47:06 Speaker_01
So it doesn't mean that wild things will happen, but new things will be enabled by this functionality.

00:47:11 Speaker_02
So when you imagine what that might look like a decade from now, what are some of the things that you're envisioning?

00:47:18 Speaker_01
Well, I always think about risks and opportunities. I think in its fullest form out a decade,

00:47:24 Speaker_01
It's hard for me to see that the ability for people to move money like that, it'll provide a lot of information to governments about, in a sense, how people vote with their feet around government policies. That'll be something really interesting.

00:47:44 Speaker_01
If you were in Switzerland and you weren't happy with what the Swiss National Bank was doing with policy, and you felt like, well, literally in 30 seconds, I could move all my money from Swiss francs to euros or vice versa.

00:47:57 Speaker_01
That's kind of interesting, right? And I think some of that stuff will happen. What probably will happen is those countries that have the most reckless policies will find that there is a greater check on them.

00:48:09 Speaker_01
And so historically, those have been countries like Argentina or Venezuela.

00:48:16 Speaker_01
But maybe what will happen is that that group of countries that have more check and balance because of these private systems and moving money around, they may find that their policies are scrutinized more. And that's probably a good thing, by the way.

00:48:31 Speaker_01
I'm a big check and balance kind of person. So I think what's important is that these currencies don't

00:48:36 Speaker_01
Ultimately threaten sovereigns and here's why I think that they won't and so it's important for me to add that because I don't want to I Think I do the industry a harm by trying to suggest that These assets are such a check and balance on governments that governments lose control.

00:48:53 Speaker_01
I don't think that that's a case I think there'll be powerful checks to a degree but they will not overwhelm a big sovereign country and here's why because

00:49:02 Speaker_01
The force of regulation right now is moving toward making these wallets and these systems transparent to government.

00:49:11 Speaker_01
So initially, when we started the conversation talking about all these markets were anonymous and you can move money anonymously, all those things are still true technically, in practice.

00:49:23 Speaker_01
Before I moved my coin into our fund, I had a PA, I had Coinbase account. And I'm sure if I did something wrong that they would turn me in.

00:49:33 Speaker_01
So there will probably be some people who continue to have anonymous accounts and they'll live in places like Venezuela and Argentina and Turkey and wherever.

00:49:42 Speaker_01
I think that by and large with these big credible nations like the US, what will happen is the regulation will make sure the government knows where money is.

00:49:50 Speaker_01
And then if we had an event which pushed the price of Bitcoin to make up a number, a million or 3 million or $5 million or some crazy number, well, guess what? These guys can tax us. And you know what?

00:50:03 Speaker_01
They can also, if they're unhappy with how that's developing, they can say, we're going to take the long-term capital gains on cryptocurrencies from whatever, 20% to 30% to 50% to 80%. They can do whatever they want to do.

00:50:13 Speaker_01
So they actually have not lost control. But there is this check and balance. There'll be a pressure. There are costs of changing tax codes like that. People go, why are you doing that? And there'll be a lot of people that say that's not fair.

00:50:25 Speaker_01
But the reality is, in a world where these guys are proactively trying to debase the currency, the dollar, having an account where they can tax a capital gain ironically becomes this new source of revenue for the government.

00:50:42 Speaker_01
This isn't Bitcoin gone wild and take over the world. I think in some nations that are very weak structurally, that could be the case. It puts a lot of pressure on them. Places like the US, not the case. Places like EU, not the case.

00:50:53 Speaker_02
And in the last couple of months, Michael Saylor's out at MicroStrategy talking about it. We've seen Elon Musk do a huge purchase for Tesla. What are you hearing and seeing from institutions of their interest going forward?

00:51:07 Speaker_01
There's enormous interest and intrigue. Really, I mean, rightly so. And that's driven by a lot more than just the price of this stuff going up. And I know that just because, I don't know, let's go back to the dot-com bubble, which we lived through.

00:51:22 Speaker_01
When we have calls with investment firms, it's often the case that we have 10 to 15 people that they're all the senior investment people at every area of a huge firm.

00:51:31 Speaker_01
And the questions that are asked are a lot less about what do you think is the fair value of this or anything.

00:51:38 Speaker_01
They tend to be more questions about what's going to be the impact of these assets in the future of finance, in the future of our company, in the future of the insurance industry, How do we think about this in a portfolio context?

00:51:55 Speaker_01
Can we really go into some of the currency debasement risks and what happens with inflation? So part of the discussion is on this appears to be a new asset class, is I think what most people are recognizing. And they want to make sure that they

00:52:12 Speaker_01
at least have a baseline perspective on what it might mean so they can kind of go and do further research. And I think some portion of them will allocate and some will wait and then eventually will allocate in some way.

00:52:23 Speaker_01
There really is enormous interest.

00:52:25 Speaker_02
We've talked a lot about what you did in Bitcoin. And without going too much into it, because we'll do that over the next couple of conversations, how do you think about extending that to other either cryptocurrencies or blockchain assets?

00:52:39 Speaker_01
So after we did this first purchase of these assets, afterwards, only after, I called Alan and just said, Revenon's a stake in our firm. And I just said, it's important for all of our clients to have an allocation to this space. It just is.

00:52:55 Speaker_01
What I've learned through this process is that there just aren't good vehicles for them to invest in. Which is not to say there are no vehicles, right?

00:53:02 Speaker_01
Because you could go directly to Coinbase, you could go to any number of firms, or you could go to some of these firms that have built their businesses for the last five years in digital assets. And there are a number of them and they're great firms.

00:53:15 Speaker_01
Some of them I'd say look more or less like venture capital firms.

00:53:20 Speaker_01
Some of them look more or less like investment banks, but there's no firm that really looks like OneRiver, which I would say, if I were to create a parallel, it'd kind of be the vanguard of digital assets.

00:53:30 Speaker_01
And so I think that there's, in any new ecosystem, you need to have strong players in each of those. You need to have strong venture players.

00:53:38 Speaker_01
And of course, you're going to, you need to have strong investment banks and you're going to, they're great trading counterparties. You need great custodians and those things have been built

00:53:46 Speaker_01
agency trading desks or OTC trading desks, but then you need a vanguard to kind of bring the best in class parts of the ecosystem together into a well-structured product where your client goes, okay, I'm dealing with OneRiver, they're a great fiduciary, they're QPAM, they've built ERISA compliant funds, like all that stuff.

00:54:07 Speaker_01
They have diversified custodial relationships, they've got diversified sources of liquidity. So I know I'm going to get best execution, my assets are gonna be safe, all those things. So my discussion with Alan was, The industry needs this.

00:54:21 Speaker_01
And so I'm going to build this out. And both Alan and Aaron Landy, who's the CEO of Brevin, who's just terrific. We all chatted about it and it made a lot of sense. And I didn't need to ask permission. I was going to do it anyway.

00:54:32 Speaker_01
But Alan just threw his full weight and Brevin threw their full weight behind what we're doing because they agree. And Alan's deeply knowledgeable in this space. He has

00:54:40 Speaker_01
all kinds of investments throughout the ecosystem and is probably the earliest hedge fund person in this space. So we agreed on that.

00:54:48 Speaker_01
And so where that leads from a progression standpoint is I think the most important allocation that can be made right now, given this valuation level, and I said this at $15,000 and I say the same thing at $50,000.

00:54:59 Speaker_01
The upside versus downside is so skewed to the upside that the most important thing I can do as a fiduciary for my clients, which are big institutional investors, they're not small mom and pop hunters or Robinhood investors, they're just institutions.

00:55:14 Speaker_01
So the most important thing we can do is get beta exposure to, I think, Bitcoin and Ethereum. Which is not to say that there aren't other interesting assets.

00:55:22 Speaker_01
It's not to say that there aren't going to be assets that for periods of time outperform those two. But it's probably the case that a lot of those assets over time won't even come close to the performance that I see out of these two assets.

00:55:35 Speaker_01
If we get our clients invested into this space, we are now deeply knowledgeable about these assets and are building the firm around that capability as well.

00:55:44 Speaker_01
We will effectively, I think, learn and evolve as this asset class evolves and be able to be, I hope, a step ahead of where the industry goes. And then as different opportunities unfold, our clients can participate in those with us.

00:56:00 Speaker_01
Some will be big and scalable. Being in the beta is big and scalable. There'll be other niche-ier ones that will have more limited AUM products, but that will happen over the coming years.

00:56:10 Speaker_02
All right, Echo, I can't get together with you without asking you a couple of closing questions. And we did run through most of them, but I just got a couple for you. What is your most important daily habit?

00:56:20 Speaker_01
Making a cup of coffee for my wife. Definitely. Definitely. If I don't do that, it's not that I'm in trouble. That's just, I wake up. That's just what I do. And what is your favorite book?

00:56:29 Speaker_01
I wrote about it recently in an anecdote, so I'll throw out there Moby Dick. I love the classics.

00:56:34 Speaker_01
And speaking of Mara, my wife, she always makes fun of me because I have so little time to read that when I read novels, I like to read things that have just really stood the test of time.

00:56:42 Speaker_01
And I enjoy, and it's a big part of what I love about markets and this industry is I love studying human behavior. And I think the classics, they're filled with nuggets that are just great insights about human behavior.

00:56:55 Speaker_02
All right, Eric, one more.

00:56:56 Speaker_01
What is the biggest mistake you've made and what did you learn from it? God, I've made so many, Ted. I won't go into details because it's personal and family, but it's an instructive lesson.

00:57:06 Speaker_01
So there was a time in my life, I think I did a very poor job of, for most of my life, was really being very transparent. And I felt like I had to keep things that I was thinking about and keep who I was kind of guarded.

00:57:21 Speaker_01
And my wife, Mara, just, she persuaded me that that was exactly the opposite of what I need to do.

00:57:26 Speaker_01
And so the great irony is, is I feel like I've become one of the more transparent people in the industry through my writing, but it's been liberating to kind of be transparent.

00:57:35 Speaker_01
And one of the things that you discover, I mean, number one, she was, of course, like almost everything in my life, she was completely right. And I was wrong. And I didn't even realize how non-transparent I was, but.

00:57:45 Speaker_01
Once you start becoming transparent with people and relationships that you have and are just open yourself up to looking foolish or whatever it might be, you end up having much more meaningful relationships.

00:57:57 Speaker_01
And that's been one of the greatest things in my life. But the reason it's a probably greatest mistake is it just, it took decades to figure that out. And so it's like, I'll never get those decades back, but that's okay.

00:58:07 Speaker_02
Well, Eric, it is really great to see you. It's been a while.

00:58:13 Speaker_01
Hopefully we don't, we both took COVID tests, but hopefully we don't, you know, didn't just get it yesterday and now we're, yeah.

00:58:19 Speaker_02
That was good. Thanks so much.

00:58:20 Speaker_01
All right. Great. Thank you.

00:58:22 Speaker_02
Thanks for listening to this episode. I hope you found a nugget or two to take away and apply in your investing and your life. If you'd like what you heard, please tell a friend and maybe even write a review on iTunes.

00:58:33 Speaker_02
You'll help others discover the show and I thank you for it. Have a good one and see you next time.

00:58:41 Speaker_00
This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. All opinions expressed by guests on this show are solely their own opinion and do not necessarily reflect those of their firm.

00:58:52 Speaker_00
Manager's appearance on the show does not constitute an endorsement or investment recommendation by Ted or Capital Allocators.